Paying Student Loans Back During Grace Period

Q: Can I start paying back my student loans during the grace period, or do I have to wait until the grace period is over?

A: If you are able to start making your student loans payments immediately after graduation, there is no reason you need to wait for the grace period to end. Although most student loans offer a grace period of 6 months, depending on the type of student loans an individual has, there may be some benefit to paying back the student loans during the grace period.

For example, if an individual has a subsidized student loan, making the payments during the grace period is of some benefit. On a subsidized student loan the government pays the interest during your grace period and any payments you make will be applied directly to the principal balance of your student loan. This lowers the total amount of interest you’ll have to pay over the life of the loan.

If your student loan is unsubsidized, it will continue to accrue interest during your grace period. If you make payments while in the 6 month grace period of the loan you reduce or eliminate capitalized interest, thus reducing the total amount of interest paid over the life of the loan. So if you can start paying back your student loans right away, it would likely be beneficial, as it could save you money in the long run.